Euro Area Economic Outlook
The economy will expand only modestly this year, weighed down by elevated inflation, higher interest rates and global headwinds. Next year, growth should gain traction amid rising real incomes and an improved global backdrop. ECB monetary policy is a key factor to watch. Potential turbulence in the banking and financial sectors and high levels of public debt pose risks.
Euro Area Inflation
Harmonized inflation fell to 5.2% in August from 5.3% in July. Prices for services rose at a softer rate, while energy prices declined at a slower pace. Inflation should decline from its current level during the rest of the year and next amid elevated interest rates and subdued economic growth. A wage-price spiral and commodity price spikes are upside risks.
This chart displays Economic Growth (GDP, ann. var. %) for Euro Area from 2010 to 2022.
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
| GDP per capita (USD) | 40,732 | 39,820 | 38,714 | 43,295 | 41,462 |
| Economic Growth (GDP, ann. var. %) | 1.8 | 1.6 | -6.2 | 5.5 | 3.4 |
| Private Consumption (ann. var. %) | 1.5 | 1.4 | -7.8 | 4.1 | 4.3 |
| Fixed Investment (ann. var. %) | 3.2 | 6.5 | -6.5 | 3.6 | 2.9 |
| Industrial Production (ann. var. %) | 0.8 | -0.8 | -7.4 | 8.8 | 2.1 |
| Unemployment (% of active population, aop) | 8.2 | 7.6 | 8.0 | 7.7 | 6.7 |
| Fiscal Balance (% of GDP) | -0.4 | -0.6 | -7.1 | -5.3 | -3.6 |
| Public Debt (% of GDP) | 86.1 | 84.1 | 97.2 | 95.5 | 91.6 |
| Policy Rate (%, eop) | 0.00 | 0.00 | 0.00 | 0.00 | 2.50 |
| Exchange Rate (BAM per USD, eop) | 1.1 | 1.1 | 1.2 | 1.1 | 1.1 |
| Current Account Balance (% of GDP) | 2.9 | 2.5 | 1.7 | 2.8 | -0.8 |
| Merchandise Trade Balance (USD bn) | 324 | 333 | 377 | 324 | -83 |
| Merchandise Exports (USD bn) | 2,742 | 2,667 | 2,482 | 2,948 | 3,079 |
| Merchandise Imports (USD bn) | 2,418 | 2,333 | 2,105 | 2,623 | 3,163 |
| International Reserves (USD bn) | 378 | 387 | 423 | 566 | 557 |
| Money (ann. var. of M2 %) | 4.4 | 5.8 | 11.0 | 7.1 | 3.7 |